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The continued near total stability in the auction and black market exchange rates as Zimbabwe moves into the festive season is killing yet another myth, that seasonal demand exerts pressure on the local currency.

In fact, the death of that myth is reinforced by the minute strengthening of the local currency in the last two auctions, by an aggregate of just 14 Zimbabwean cents, but enough to stress that there is no pressure in the market place that could damage our new found macro-economic stability.

This shows that the stability is built on a solid foundation of fiscal discipline of the Second Republic and the balanced budgets we have enjoyed since October 2018 reinforced in the recent National Budget Statement for 2021, when Finance and Economic Development Minister Professor Mthuli Ncube gave the figures for this year and his budget for next year.

Even the one monthly blip on his graphs, July this year when a lot of Covid-19 bills fell due, was paid for out of his accumulated surpluses and the small surpluses he then won in the rest of the year. And next year still shows that rigid discipline almost everyone expects from the new normal.

Even the overwhelming bulk of his capital budget, now close to his staff costs budget although still in second place, is being paid out of taxes.

Even his tiny borrowing requirement, just adding some cream to the capital budget, is way below what other prudent ministers would allow and only for those capital items where a revenue stream is instantly generated that can be paying off the small sums borrowed from the first month.

In fact, the level of prudence is so high that Minister Ncube has left himself with a lot of room to manoeuvre if another big cyclone or some other disaster hits.

The markets have voted since budget day by actually strengthening the Zimbabwe dollar on the auctions, and those secret ballots are worth a lot more than any statement from any economist, whether approving or trying to play prophet of doom.

Everyone accepts that the Zimbabwe Government is not going to pump liquidity into the economy by printing money or borrowing recklessly.

In fact, the private sector wins out quite spectacularly with the Government’s withdrawal from the borrowing markets since national savings can be applied to the capital requirements of the miners, industrialists and farmers who actually create wealth by producing more.

The second major stabilising factor is market driven.

By getting the fiscal measures right, stressing production, and getting a market-priced exchange rate in place, Zimbabwe has reinforced the trend seen from the start of the Second Republic of us exporting more than we import.

This is actually a big thing, and reverses the decades-long trend for us to consume more than we produced.

That in turn means the Government and Reserve Bank of Zimbabwe (RBZ) can ensure there is enough foreign exchange for serious production-orientated bidders.

For several months now, all bids with the correct paperwork done have been successful, the bidders having learned to bid within a tiny range, but in the rational expectation that they will get what they have the local dollars to pay for. Amid the weekly fluctuations in allotments, there is an underlying trend of steady increases, meaning that the requirements of the productive sectors are being met in full.

The doubters are reassured by the accompanying stability in the black market, where rates have been totally steady after falling from their pre-auction highs for several months as well, with sellers getting no more than a 10 percent premium.

The RBZ has been supporting the Government, not only by running an honest auction every week, but through the sort of things normal central banks do from controlling liquidity to ensuring the whole banking sector, now including the mobile money service providers, runs smoothly, honestly and prudently.

There had been mild concern that the rising salaries, first in the private sector and then as resulting tax revenues rose in the public sector, would apply some consumption                    pressure.

The stable exchange rates killed cost-push inflation, but there has been no demand-pull inflation.

Households are using their extra spending power, which is modest, to pay off debts, eat a little better, replace essential work clothes or uniforms, make the odd home improvement and save up for next year’s school fees.

No one is rushing out to spend, spend, spend.

The bit of extra cash makes life tolerable, rather than impossible.

There have been anecdotal reports that the odd retailer has tried to muck around with prices, but general agreement that these are in a minority.

So consumers have the power to break that, by shopping somewhere else, even if that might mean in some new housing areas walking an extra kilometre rather than supporting the local tuckshop owner chancing their arm.

But generally the competition in urban areas is so intense that price-fixing rings are almost impossible to sustain.

It just needs one shopkeeper to break ranks and the ring collapses.

The pressure on producers to price properly is growing.

New Government policies have made it a lot easier to set up a factory or a bakery or a processing plant, and so increasing the competitive elements, and the auction system means that a newcomer can get the imported machine or raw materials.

That has seen new brands entering the market, and the market itself is one that is keen to support the lower cost products, so long as quality is adequate.

So the newcomer will at least get a trial, and if they are competent and offer quality, they will build a customer base.

That in turn keeps the older producers, who once may have had a near monopoly, in line.

Since the start of the Second Republic we have been building a real economy, with the largest rewards going to producers.

The stability had to be built on Government discipline and the strategic stress on production. But given that, the markets self-adjust to maintain stability.

And for those of us on the receiving end, the consumers, we can now, as everyone is saying, plan and make and maintain household budgets.

Again, the new normal.